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All right, take two. Melody, welcome back to the show.

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Thank you so much. Thank you for having me. It's my pleasure to be here.

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Well, like I said, it's timely talking to you as somebody settling on a house next week.

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May not be the best market to do it, but I got to get my forever house.

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And for anybody who didn't catch the first interview with Melody in Q3, beginning of Q4,

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last year, just a little background. Melody's a housing market analyst and independent researcher.

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She's based in Tennessee.

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She runs the M3 underscore Melody sub stack, which is great.

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I highly recommend subscribing to it if you want to stay up to date on this.

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She's doing deep dive analysis on housing data, labor markets, and the intersection of government policy with real estate.

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Former mortgage industry professional who now does investigative field reporting, literally visiting homeless camps, detention centers, and distressed neighborhoods to ground truth the data she studies, collaborating with other researchers.

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and getting data from FRED, NAR, Census, and county-level records.

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And like I said, I think your most recent newsletter that you dropped last week

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talking about home sales in December, the retail credit situation,

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and the stress the consumer is under is something that many people are not aware of

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because we're being told that the economy is running hot.

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it's the best economy ever, but if you look under the hood, things are not all well from

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your perspective. So what are you seeing out there, Melody? Yeah, no, I think you summed it up nicely.

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I mean, you know, we've been seeing this under the covers trouble for some time, especially in

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what I'll call government subprime FHA. You know, when those student loans started reporting to

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credit again, it really impacted a lot of the people who should be forming households. And so

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you had people going from 750 credit scores to 550. And so very quickly, you know, credit got cut off

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at the same time, you know, in the mortgage market specifically, guardrails went on the FHA program,

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which were being taken advantage of. A lot of fraudsters were taking advantage of it, but

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essentially you could just keep not paying over and over and you would go get another workout and

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another workout. And so guard whales went on that program. So, um, you could, when we look at stuff

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in the aggregate, Marty, I think this is where everybody, you know, can have that false sense of

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calm because it looks okay. Like, Oh, you know, home equity, that looks like that's great. Not

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unlike the last time people will often say, but there's so much going on that's new that people

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don't understand. Like today, for instance, Klarna reported, right? And they had a loss

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and they are very much some of the people that use Klarna, buy now, pay later, are the exact

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people that would be, that we would hope would be out there buying homes. But unfortunately,

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they have to, you know, basically finance their burritos. And so, you know, you look at the use

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unemployment rate. I mean, so I guess there are so many things, so much weakness under the surface

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that almost no one is paying attention to. And so in all pockets of the market, be it in mortgage,

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where you're starting to see delinquency rise, and we're going to see that from here,

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you're actually starting to see the prime books get impacted. And they always come after the

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subprime, you know, when the layoffs happen. And the issue now is a lot of this lending was made

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on inflated credit scores. And that did not include, you know, the student loans and things

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like that, or, you know, those eviction moratoriums. And now those inflated credit

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scores are coming down with student loans reporting. So it's just a much murkier picture

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than what people, and I don't know how anyone can say anything positive. I mean, existing home sales

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last year were the worst since 1995, and we've increased population by over 20%. I mean, so,

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you know, this market is completely frozen. You had a lot of rage delisters last year

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that couldn't get the price they wanted. And so they just took it off the market. But what you've

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seen since the recent Bitcoin route, kind of what happened there and the wobbliness in the stock

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market is inventory is flying to the markets. It had been coming off, but now it's flying on

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non-seasonally. This isn't the time of year you would typically, typically your inventory bottoms

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in February. So. Well, I thought it was interesting that you covered the Bitcoin price drop and gold

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and silver in this newsletter, because I'm not sure if you caught on to this meme, but I think

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Bitcoin is a leading indicator of liquidity, right? It trades 24-7, 365. It's very easy to sell

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and get cash. And so if a liquidity crisis is pending, it's one of the first assets to go.

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And so that's what we've been talking about in the Bitcoin space with this price drop of 36%,

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48% since the highs of late October, early November last year, is that something's got to be wonky in the back of the system from a liquidity perspective.

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And I think a lot of the data that you highlighted in your newsletter last week points to this.

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I mean, looking at credit card spending in December alone, it looks like people were tapped out of cash and really pulling out the plastic to do their spending around Christmas time.

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And then I think it would also be important to really dive into the new home listings and home sales in December because those are some pretty historic lows in terms of what's coming to market, what's actually being sold.

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Yeah.

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So specifically on the new home side, we're going to get results tomorrow for both November and December.

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And we, you know, we've been going off.

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We only got October because census is the one who prepares that.

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But on the existing home side, I mean, yes, a lot of people wanted to blame the storm,

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Marty, but California is our biggest housing market out there.

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And the storm came very late in the month.

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It was just, I mean, these were just really bad sales, like worse than January 2007, worse

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than January 2008.

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Right. And, you know, again, the population is much higher. I think there's some things going on, though, that a lot of people don't understand, which is I think that the National Association of Realtors, these listing sites, the MLS, they're losing relevance.

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And so I think that we're actually having, there are quite a few transactions that aren't being captured in their statistics because you had a lot of people, they did this back in the 80s too when rates rose, is you had a lot of seller financing because, you know, people couldn't get approved at the higher interest rates.

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And so the seller would say, I'll finance this for you.

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Those and selling homes.

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So some of those, some of the transactions are just not being captured.

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A lot of them by the investors as well.

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And so, you know, we're just, the housing market has always taken it.

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The indicators are very lagged.

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The data is not real time because a lot of it to really get accuracy is pulled from county records.

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and that is, that can be, there's over 3,000 counties in the country and some of them,

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believe it or not, are not on any kind of e-record platform. They're still mailing stuff in. So,

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you know, I just say that because all those sales are horrible. I mean, they're just absolutely

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horrible. I think we are missing a component of the housing market right now with these private

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note actors that are out there transacting, not on the MLS. So I just kind of wanted to state that

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because I think people are going to be surprised when they realize how much inventory is out there.

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And because I talk to them all the time, they say, well, look, look at what was on the MLS in 2008.

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There were 4 million homes and now we only have a million. And I'm like, yeah, but there have been

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studies that 50% of transactions aren't like, let's say in Austin weren't handled through the

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MLS. So I, we have, we're just, it's a very murky, muddy picture, um, that I hopefully haven't lost

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everyone in those details, but, uh, what we are starting to see is median listing price. Uh, so

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that's the idea that the median of whatever the listing price was, um, that has now come in

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negative year over year for two months in a row. It's now under 400,000 for the first time since

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2022. You know, while the builders, on the other hand, for their prices, they have been selling

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under the existing home price for almost a full year. In the last cycle, we saw that one month,

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one month in June, I think of 2006. And so you've got this, these crazy fundamentals where the new

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homes are selling below $400,000, a median price. And then that's not even including the $50,000

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of incentives they're putting on top of that. And so we just got builder sentiment and it went down

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again as well. So I'm really looking forward to new home sale results tomorrow because it'll give

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me a clearer picture. But at this moment, last year was the worst we've had in over 30 years,

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which is insane. Yeah. Just anecdotally to confirm one of your theses there, I mean,

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the house that I'm buying, we did it off market. So it didn't hit. We're in a neighborhood where

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you have a bunch of aging out boomers who want to hand it off to younger families. And

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so we're able to do that transaction directly. And I think there's a lot of that going on,

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at least where I am. I do too. And then, you know, if you're not pulling from public record,

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then no one really knows what the median price is out there. You know, if homes aren't selling

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that are, you know, or they're selling, but not being captured in the MLS, then we really have

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no idea what is going on out there. But what you can get a sense of, you know, because I track 85

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markets is there's price cuts everywhere. They're just not selling those houses. They're just

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continuing to do price cuts. And so it's going to be one of those gradually then suddenly things,

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when you actually can get someone in the market to buy.

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But that's the thing.

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There's just nobody left to buy,

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and the institutionals are not interested at these price levels.

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Well, this comes back to something else you covered in last week's newsletter,

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which is non-farm payrolls and the revisions.

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And I think that's one thing that always makes me chuckle,

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is you get the headline number,

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and then nine months, a year later, you get the revisions.

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and nothing's as verazie as it was originally reported.

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No, and that just seems to be happening on every front, right?

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And so I think, you know, just take the new home sales price for a minute.

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They shaved almost, they revised five years of history through the COVID

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and shaved $30,000 off of the new home price high, okay, peak.

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It was at $496.

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They revised and said, no, then they didn't tell us why they really tell us why.

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But now it was at the peak was 460,000 on the new homes and just five years of what we thought was reality just got wiped out.

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And so I that's the limitation, I think, of the data.

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And that's why I think you have to go look for yourself.

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And you also have to, you know, track nontraditional metrics because there's just we're not getting the full picture out there in any way.

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Yeah. Well, sticking on the jobs market, too, I mean, you highlight that there's a bit of a jobs mirage with education and health services carrying the entire labor market.

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And we've come to find with health services specifically, it's a lot of that's driven by overt fraud.

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Exactly. That's where a lot of those Somalis jobs were.

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You know, that's where they sit.

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And so what happened after the American Rescue Plan is all this money went out to the municipalities and they created all these programs like housing affordable, daycare programs, whatever.

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And they employed a lot of people, theoretically, although I think a lot of it was fraud.

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And so that's why you've seen that job growth.

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But what's happening now, Marty, is these municipalities have run out of money and it's not coming.

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I mean, California is a great example of they are in so much trouble.

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Chicago, another example, they don't have any more money to fund these programs and they're

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not going to get it from federal.

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They might get a little, but they're not going to get enough to sustain them.

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And so, you know, we're looking at a bunch of municipalities in crisis, which will impact

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those education and health services jobs, which is the only jobs that were created last

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year, really.

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Yeah.

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And if you're not getting a health service or education job, you're getting a second job, which is.

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Well, right.

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Right.

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You know, that's the highest percent of workers holding two part time jobs ever right now.

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Yes.

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Ever.

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In the seriousness, I think it goes back to the 60s.

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So, yeah, that's nuts.

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It's so two two part time jobs just to make ends meet.

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I mean, that's insane.

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Yeah.

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And then, I mean, we don't want to be too dimmerish here, but we're trying to still exactly what's going on.

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And you also mentioned like private credit in last week's newsletter.

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And that was actually funny enough.

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The FOMC meeting minutes from last month came out earlier this week and private credit was an area that the the board highlighted as something to pay attention to and that is wearing them.

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And this is another thing that's not tracked in this space.

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Like so. So what you know, you have your old traditional hard money lenders, which would like you don't it's like a personal loan.

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but they were very, they were usually regional and they would make you pay a huge down payment or

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an exorbitant interest rate to kind of cover their risk. What private credit did

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is they came in and when they thought they're sophisticated underwriting models, they weren't

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that sophisticated. They just went off the credit score basically. And so I've talked to people in

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this space that are freaking out because they know those credit scores were inflated. I mean,

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look at Klarna today. Like that, that is, we knew this was coming, uh, uh, because we knew that the

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numbers they were reporting for delinquency did not add up, but yeah. And so you've got a ton of

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private credit out there and the banks have lent to, um, you know, people like Tricolor and, and

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those actors who have gone out and lent money and they're not recording deeds. Uh, so we don't know

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If there's money lent against the house and they're also many of them aren't reporting to credit, you know, and so it's just a big and we know that the shadow market is about two and a half times bigger than it was during the last crisis.

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Yeah. I saw a headline yesterday about subprime auto loan delinquency rates skyrocketing and obviously 90 plus day delinquency rates on real estate arising as well.

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And I'm just wondering how much of that is due to the immigration policy of the last year and how many immigrants that were here illegally but were able to get FHA loans and subprime auto loans simply had to leave the country, which is driving that up.

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But regardless, there's still no one can really track that.

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You know, I've been trying to get good data on that, but there's just not really good data.

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Yeah. Well, you're talking about the 90 plus day delinquency rates in real estate specifically.

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And there's some sort of foreclosure game going on.

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Oh, the sub two.

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Yeah, I'll talk about. So I'll talk about what's going on in delinquency.

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So basically, when the guardrails went on that FHA loss mitigation program, which was just basically an open till to whoever wanted to come take advantage of it, that meant that we were going to see serious delinquency increase because they are no longer eligible for some of these workouts or they have to do things like make a trial payment.

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So let me give you, I have one borrower and one of my client books who went back six times

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and has been delinquent for the past two years but nowhere near foreclosure yet Marty And so you know because all that government intervention and work out and so that all

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finally running out, believe it or not, and will run out over the next 12 months.

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And so that serious delinquency is going to go up. It will get a little bit of improvement.

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We always do in the spring with like bonus payouts and tax refunds and things like that.

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What'll be interesting to track is how much.

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And because like for auto, it didn't help last year.

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So we'll be watching all of that.

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But what you are talking about.

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So this is something the mortgage industry has no idea is going on.

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It's called sub two are subject to mortgages.

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And what these investors did is they would, when you're in default, the servicer has to record something called a notice of default or a list pendants saying that you're about to be a complaint will be filed against you.

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So the investors will go research those and then they'll go contact you and they'll say, hey, listen, I got a deal for you.

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I could take over your mortgage payments for you. If you sell me this house and I could maybe give

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you an equity sweetener or you could rent from me for a little while. And this investor is trying

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to find someone while they're doing all that, they're trying to find someone to buy the home

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from them. What's happening now, initially these investors would record those deeds,

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note becomes immediately due and owing. So what's happening now is these investors, as I knew they

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would, because they always do, they walked away. And now the borrower is on the hook because they're

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still on the note. And so foreclosure proceedings are going against them. They may not even be

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living in the house anymore, Marty. But this is a huge kind of, it's part of that private note

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shadow market that I was talking about. And I think this is one of the things that's kept

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delinquency lower. But people can no longer, when home prices aren't appreciating, you cannot get a

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buyer to come in and just, you know, pay ridiculous money for that house anymore. And so they're,

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they're, you know, they're walking away. They can't make the payments.

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So there's just a ton of stuff going on in this market.

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And that's up to carry the investors are walking away because they don't have the cash

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or are they just saying, Hey, this isn't worth it. And those things. Yeah. It's not worth,

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it or they don't have the cash and then i mean for for the private credit specifically whether

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it's hard money lenders these sub two investors and you get like commercial real estate it's got

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to be again the fed calling it out yeah last month or the fomc it's becoming abundantly clear that

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private credit is in trouble and we had what was a blue owl last night stop uh stop redemption

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some of their retail oriented private equity funds.

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It seems like all the cash that was printed and flushed into the economy in 2021, 2020,

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it's not getting the return that those investors have everyone.

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No.

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And, you know, especially there's so much private credit and real estate, you know,

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like 20 to 25% of loans and private credit.

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I mean, commercial real estate or private credit loans.

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And I mean, so, yeah, this is a dumpster fire and it's, you know, and I guarantee you that a lot of the people that are at these firms know how much trouble they're in, but they're not telling anybody, you know, it takes a long time as we can see.

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I mean, Blackstone, for instance, is in a ton of trouble and, you know, and it's, but they can keep up appearances, but they're running out of time.

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They're losing enough on the commercial real estate. They're losing enough on their single family rental business that I think we're going to start seeing impacts in Breit, for instance.

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We'll hear about them gating redemptions again as well, probably in the near future.

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That's been one of my sort of tinfoil hat theories with Trump announcing that these investors can't buy single family homes anymore.

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And his $200 billion mortgage buying facility, I don't know if it officially launched, but he announced it.

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They had already been doing it. They'd already been buying the MBS.

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Yeah, particularly with the former, though. It's just a sly bailout. You're going to say they can't buy them.

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Oh, it's a total bailout. Yeah, it's a bailout for them.

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Because I was in the room with one of them in September and he's like, we've been chasing price for a year.

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You know, they don't get a homestead exemption.

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So their taxes are much higher.

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Their insurance is higher.

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And so they can't, they are, as soon as these long-term rentals, the leases expires, they're rehabbing them and selling them.

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And which is why you're seeing price declines in places like San Antonio and Atlanta and Tampa, because you have very large institutional presences in those cities.

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it's a bailout Marty

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I mean that's I guarantee you

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this is phase one oh you can't buy

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these homes anymore phase two is like

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hey you know we'll give you a deal

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if you sell these homes

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through one of our affordable housing

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programs

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well that's what I was saying maybe they have like

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a BTFP

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facility they're going to say hey we'll

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just buy we'll buy these assets a par for you

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100% I bet

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we'll get there

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Yeah. So where, where do you think the sort of rubber meets the road and this becomes obvious to the market?

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Oh, I don't know. You know, the fact that we're in an election year, like, you know, I, I think that there is like, there's a, it's accumulating the awareness.

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Like, you know, it's no longer just Florida and Texas. Like California is on the board. Like it is on the board.

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you're starting to see a deceleration in the Midwest and Northeast on their home prices.

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And I think pretty soon the Midwest will turn because they just, I mean, investors descended

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on them because they were the last place you could get a decently priced single family home.

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But I think it's going to take till the Northeast has some sort of awareness for there to be

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national awareness. And the Northeast has a ton of problems around their demographics.

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And, you know, those census updates are huge, showing everybody they didn't quite get the population game that they thought.

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And, you know, the Northeast, very low owner occupancy, which means you got a lot of mom and pop investors, most of which are boomers who are aging out and will be.

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I mean, what's really interesting, Marty, I'm seeing in the cities I track is that the rate of folks who are deceased property owners, like so you can track who's deceased is, I mean, in some cities up 25% year over year.

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And so, you know, this is going, and Charles Schwab did a study and said 70% of the time, people who inherit property sell them.

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And so all these things take a little bit of time.

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It takes time to get through probate. But I think the demographics are going to really start to become obvious in places like the Northeast and Boston and actually Philly and Pittsburgh both have been showing price weakness.

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And so, but I think until the Northeast falls, there probably won't be large scale awareness.

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But with the price cuts I'm seeing, you know, once we can get activity in the market, we are definitely going to see that suddenly, you know, hit the gradually then suddenly.

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But we could skate for another another selling season based on, you know, hopium and promises.

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But I have a feeling we're going to see some disorder in this selling season, especially in places like Texas and California.

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Do you think this is necessary?

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Oh, yeah. I mean, yes.

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I mean, if they'll let it happen, they're going to try everything.

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but everything, there's just, there's a point where everything doesn't work anymore. You know,

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like everything they've tried, like, like I love to talk about, they bought mortgage-backed

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securities back, you know, in 2009 and, uh, you know, prices just kept plummeting. Um, and it

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didn't do anything. Like it, it created a little refi boomlet in 2010. Um, but now we've got people

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like the fed reported over 43% mortgage refi rejections. And so people can't even, uh, you

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know, they can't qualify for a refinance. It's the highest in their series, you know? So it's just,

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it's just a slow burn that is, it's gaining speed and gaining traction. But if we could get

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transactions, we would see true price discovery. And yes, it's absolutely necessary because,

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you know, household median income is not even in the same ballpark as, you know, median homes

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prices. And so who's going to buy these? It's not going to be the institutionals. It's not going to

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be your cohorts coming of age. I mean, the unemployment rate in the 18 to 24 is insane.

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So we're not going to form households until the affordability problem is fixed. And so,

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yeah, I think this is necessary. Yeah. Then you have the AI boom

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happening, which is telling the Gen Z and Gen Alpha don't even try to get a job.

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Right. As if their lives couldn't be more depressing, you know, like it's just it's kind of.

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Yeah, it's really it's really not good for that cohort right now.

283
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No. Well, you have the whole K-shaped economy meme becoming more prominent.

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I think it's becoming more confirmed. It is.

285
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Oh, yeah. It's not easy out there, particularly for the younger generations.

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And again, going back to the demographics and push coming to shove with boomers aging out and

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just factually dying out as well.

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The flood of supply that just, if you're just looking at the math,

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is due to hit the market is going to be pretty significant.

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And this goes back, I mean, this is something I've always been curious about

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with new home builds too, when you consider the quality of new builds

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compared to older builds, particularly if they were built 50 years or longer ago.

293
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They're actually sturdier.

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The house that we're buying is very old, and I feel more comfortable in that than some of the new builds coming up.

295
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And this whole supply meme that's been going out there, you have podcasters like the All In guys and the president in this administration saying,

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we just need more supply to bring prices down.

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I don't think that's the case.

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And on top of that, the new supply is not a quality build at the end of the day.

299
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No, because who was building it?

300
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And, you know, it was subcontractors of subcontractors, but they were illegal immigrants.

301
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That's who. And often I, you know, on these new build sites, Marty, it's it's it's it's a little scary.

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Like you're you're seeing like we did one video where we just went around, got the Jack Daniels bottle, the Medela cases, empty cases, like the empty beer bottles that were just all over.

303
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I think it was Lenar job site. And so, you know, the quality is horrendous. There just wasn't,

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I mean, all these, uh, thousands of new home communities I went to, you didn't have, um,

305
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these did not look like professionals building these homes and nor were they managed by

306
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professionals on site. Yeah. So how much of like the lack of new home sales is being driven by

307
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people looking at these being, I'm not buying this paper mache box. Right. And then,

308
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I think that's part of it.

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What is the exposure to these?

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Yeah.

311
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And not only that, they built luxury.

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It's like, who are you building for?

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Like, you know, I know in 21, we saw wages rise, but not like something crazy.

314
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But that's what happened is all the builders went out there and built for the Californian and New Yorker that was coming to their town and built luxury apartments and all luxury homes like these gigantic.

315
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Some of the spec homes I've seen out there just blow my mind.

316
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like $13 million spec house, $25 million spec house, meaning they didn't have a buyer.

317
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They just built that house. And it's like this massive luxury structure that you can go in all

318
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the 85 markets I track and you can see this luxury sitting empty. There are not enough people to buy

319
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those homes. And so I think you're going to have, there's going to be a lot of bulldozing when

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people really finally start to deal with the problem. But we're far from that right now,

321
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unfortunately like people people are still believing that it's an inventory shortage

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the i mean we talked about this last time around but when i was in austin uh there was one of these

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luxury builds around the corner from us we moved in 2021 we finished construction i believe in the

324
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beginning of 2022 and we left june of last year was still sitting there up for sale yeah and and

325
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what's crazy is a lot of these cities are still building them like phoenix i'm just like you

326
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people are nuts. I mean, and, and they're everywhere and it's so weird. It's like these developers,

327
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they never just drive around the town. They never just even go two blocks over. Like Nashville's

328
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another good example. If you, if, and when you go back, like there's a attached to downtown,

329
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it's just like apartment on top of a part. I mean, if all of those, if 50% of those apartments and

330
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they're all new were filled, you would never be able to leave your house because the traffic would

331
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be so bad, the congestion, because they just built all these things on top of one another with no

332
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parking. And that's the really sad thing about a lot of this is that people just, you know, set new

333
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builds down in cow pastures, wherever they could find, you know, they could build and they didn't

334
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think about infrastructure. And so, you know, and I've seen some really sad small towns be destroyed

335
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across the country due to like, okay, you're outside of Raleigh. Oh, that's going to be the

336
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new Apple headquarters. Oh, no, not so much. Maybe not, you know, or whatever. So and so they went to

337
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these little towns and just like destroyed them. They like bought up all these older homes and fixed

338
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and flipped them or just, you know, put those new build communities. But there's no way to get in and

339
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out of these towns. Like it's all, you know, two lane. It's just it's so it's so sad. Very high time

340
00:31:56,792 --> 00:32:02,492
preference, describe it as the high velocity trash economy where you're just building to

341
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build to hit your quarterly marks.

342
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Absolutely.

343
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What do you think the knock on effects of all this will be?

344
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Well, we're going to see crime increase.

345
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I mean, if that, I mean, that's, that's an effect because the vacancy out there is a

346
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massive problem that nobody's talking about.

347
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And, you know, it's only a matter of time when all the homeless in Austin figure out,

348
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you know, 10 miles south, there's an empty new build that nobody's policing. It's like,

349
00:32:32,452 --> 00:32:38,132
why don't we just go set up shop down there? You know, but I think you're seeing it already in

350
00:32:38,132 --> 00:32:43,052
cities like Dallas, in the downtowns. They're, they're just, they're, they're terrifying.

351
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I wrote a, an article for Unica's research last week, which was called Creepy is Not Cool,

352
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because these downtowns are creepy. I mean, they're just creepy. You don't want to be in them,

353
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which means they're never going to be able to get, you know, they're not going to be able to attract new business down there either.

354
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And so I think you're going to have an increase in crime.

355
00:33:04,292 --> 00:33:07,272
You know, we're already seeing an increase in homelessness.

356
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And so. But later down the line, if you're not in debt and this is really important, don't get into stupid debt.

357
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and you have a job, like you have a job, maybe you're a plumber, maybe you, you know, instead of

358
00:33:25,932 --> 00:33:32,272
going to school, you went and did a trade, then you're going to be in a good position to get a

359
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home. And so that, that's the, the long, you know, after a few years, that's the effect. And in some

360
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of these markets, it'll be before then as well. But yeah, I mean, we're looking at, I think we're

361
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going to be looking at a lot of municipalities like filing bankruptcy. And I think they'll

362
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probably be begging for help from the federal government to deal with these vacant homes So and because a lot of these homes were bought with all cash during this last cycle which means they not sitting on a bank balance sheet which means you not

363
00:34:03,684 --> 00:34:10,324
the grass isn't getting cut. The pipes aren't getting winterized, the molds not getting removed.

364
00:34:11,164 --> 00:34:17,024
So that means all kinds of issues. I mean, I saw it when I managed to fault during

365
00:34:17,024 --> 00:34:23,004
the last crisis. I mean, these homes get into the worst shape, um, and you almost can't even

366
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recover them because, you know, they're just in such a state of disrepair.

367
00:34:27,244 --> 00:34:31,604
Yeah. When you say downtown Dallas is great. Like, so what do you mean specifically? What

368
00:34:31,604 --> 00:34:38,384
are some examples? So, so, uh, what's crazy about Dallas, uh, is they've got these massive,

369
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um, you know, high rises, uh, commercial real estate completely empty. And on the back of it,

370
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You see a stroller and evidence of homeless that have been living there.

371
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And then right next door, they have this massive high rise that's being completed office building.

372
00:34:58,044 --> 00:35:03,244
But if you walk in downtown Dallas, like it's just it's a ghost town.

373
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It's a ghost town. And it's creepy because you're walking around it.

374
00:35:08,364 --> 00:35:13,024
You know, you're seeing these what looks like homeless camps in downtown Dallas.

375
00:35:13,024 --> 00:35:21,284
so uh you know that that's and but this is every i mean it's every like san antonio you know a very

376
00:35:21,284 --> 00:35:27,064
similar situation i when i was in san antonio i saw somebody od right in front of us like we were

377
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in a truck like filming downtown right next to us just od i mean it it feels as if most people

378
00:35:35,224 --> 00:35:41,084
haven't been to their downtown in a very long time because they just are unaware with how how

379
00:35:41,084 --> 00:35:45,564
creepy these places have become because they're just empty. They're empty, you know?

380
00:35:46,644 --> 00:35:52,204
Do you think despite the positioning by this administration that everything's all good,

381
00:35:52,404 --> 00:35:58,144
economy's hot, they understand these problems exist and they're just, I think you described

382
00:35:58,144 --> 00:36:04,844
the saber rattling between President Trump and the Federal Reserve as K-Fob. Do you think

383
00:36:04,844 --> 00:36:21,904
Similarly, the projection of everything is all well and great is K-Fob too, and they know things are not all well under the hood, and they're just trying to narrative craft until they can find an excuse to actually flood the system with more liquidity.

384
00:36:22,824 --> 00:36:33,464
Yeah. So, you know, this is a question I just, I obsess over. I can't, you know, it's like they have to know some of it.

385
00:36:33,464 --> 00:36:46,084
And if, you know, but I have a feeling they don't know all of it because I talk to people in government now and about their cities and say, did you know this?

386
00:36:46,164 --> 00:36:46,704
Do you know that?

387
00:36:46,764 --> 00:36:57,644
They don't know, you know, because that's what's happening now is I'm getting contacted by more policy focused people who want to talk to me about maybe solutions.

388
00:36:57,644 --> 00:36:58,804
Finally, that's happening.

389
00:36:59,064 --> 00:37:02,884
But they aren't aware of how much inventory they have.

390
00:37:03,464 --> 00:37:09,284
And in places like Texas and in some unincorporated areas across the country, you didn't even have to file permits.

391
00:37:09,284 --> 00:37:12,784
And so a lot of local leaders don't even know.

392
00:37:13,004 --> 00:37:21,404
And so I think it's funny, like Pulte followed me for years before he got.

393
00:37:21,864 --> 00:37:23,744
And, you know, he would share my stuff.

394
00:37:23,864 --> 00:37:27,284
And all I ever do is talk about the inventory shortage myth.

395
00:37:27,284 --> 00:37:35,004
myth. And, you know, but the day one into the administration, he, you know, sang a different

396
00:37:35,004 --> 00:37:42,304
tune. And I actually know the CFO of Freddie, he was one of the last people standing because they

397
00:37:42,304 --> 00:37:48,384
went in and gutted the executives at Freddie. I mean, he was my boss during the GFC for a certain

398
00:37:48,384 --> 00:37:56,264
he has to know. I haven't spoken to him, but there are just so many clear telltale signs. If you are

399
00:37:56,264 --> 00:38:03,664
in the know. And so it's weird in mortgage specifically, like people who originate the

400
00:38:03,664 --> 00:38:09,264
loans never talk to people who service the loans. And so the originators never realize what's

401
00:38:09,264 --> 00:38:14,124
happening on the back end. And so I think we're still in that part of the cycle where the

402
00:38:14,124 --> 00:38:19,424
origination narrative is kind of driving the narrative. But in servicing, when I talk to the

403
00:38:19,424 --> 00:38:24,844
big servicers, they know what's happening. So I think it's probably a combination of they know,

404
00:38:24,844 --> 00:38:30,504
and, but they don't know the scale. But if, if, if it were me, um, and I would never do this,

405
00:38:30,524 --> 00:38:35,224
I don't want to be a politician, but if, if I were a politician, I would, I would do probably

406
00:38:35,224 --> 00:38:41,424
what they were doing. Like, just say whatever, like, what is it, you know, you're just, he's

407
00:38:41,424 --> 00:38:47,964
speaking to whatever interest group in that moment. And, but you have to look at what the policy is.

408
00:38:47,964 --> 00:38:54,244
And when they put those guardrails on FHA, um, that was a real action and that's going to have

409
00:38:54,244 --> 00:39:02,284
real consequences. And they have to know that delinquency on FHA is unbelievable. And so there

410
00:39:02,284 --> 00:39:06,844
have got to be people on that side of the house that understand that this is really, really bad.

411
00:39:08,064 --> 00:39:13,364
Yeah. Is there anything similar going on to sort of just vanilla bank loans? I've been reading

412
00:39:13,364 --> 00:39:21,524
Bill Moreland's bank reg data, and he was saying that they're just disguising sort of their

413
00:39:21,524 --> 00:39:26,844
exposure to these delinquent loans by some sort of 12 month window that they're able to push it

414
00:39:26,844 --> 00:39:32,944
off the balance sheet. And it looks like it's better than it actually is. Yeah. Yeah. And Fannie

415
00:39:32,944 --> 00:39:37,924
and Freddie in an FHA hasn't done as much of this recently, but they do these things called

416
00:39:37,924 --> 00:39:42,984
non-performing loan sales. And so they'll literally take their delinquent book and sell it and then

417
00:39:42,984 --> 00:39:49,864
turn around to you and say, Hey, our delinquency is only 0.67%. Well, where'd those loans go? Okay.

418
00:39:49,864 --> 00:39:56,504
Well, they went to private hedge funds who then turn around and sell it to individuals who don't report to credit.

419
00:39:57,224 --> 00:40:02,624
And so, you know, like we just we just don't have a very clear view of what's really.

420
00:40:02,624 --> 00:40:07,504
But yes, you know, I try to help people understand that.

421
00:40:07,504 --> 00:40:15,604
what they did is instead of waiting for the crisis, they took the old loss mitigation programs

422
00:40:15,604 --> 00:40:23,684
from the GFC and they put them on steroids and they took away all the requirements and things

423
00:40:23,684 --> 00:40:27,544
you had to do because back then you had to virtually re-underwrite the loan. Well, they

424
00:40:27,544 --> 00:40:31,944
said, you don't have to do that anymore. You don't even have to ask for their financials. I mean,

425
00:40:31,944 --> 00:40:38,344
this is crazy, Marty. I mean, that's crazy. Like you don't even want to know if they can pay.

426
00:40:38,344 --> 00:40:43,524
Like what? Like, why would you, it's all a game of extend and pretend. And so we've had,

427
00:40:43,784 --> 00:40:49,264
if you think about it, we've had enough, like the same amount of workouts that we had after the last

428
00:40:49,264 --> 00:40:55,964
cycle times about two or three. And that's what's kept us skating for this long. And now that stuff's

429
00:40:55,964 --> 00:41:02,864
running out. So it's just like what Bill talks about. Yeah. And it's funny too. I've been talking

430
00:41:02,864 --> 00:41:08,204
about extend and pretend. And I don't know if this went anywhere, but you're mentioning Bill Pulte,

431
00:41:08,604 --> 00:41:13,544
the 50 year mortgage that was floated in December. What was your reaction to that?

432
00:41:13,544 --> 00:41:20,644
Yeah. I didn't want to talk about it, but like literally everybody, I got so blown up. I mean,

433
00:41:20,864 --> 00:41:25,064
my life went crazy for a couple of weeks, but I was just like, this is so stupid. I can't even

434
00:41:25,064 --> 00:41:30,844
talk about it because, you know, by year 11, if anyone in this country like knew what an

435
00:41:30,844 --> 00:41:35,224
emergenization schedule actually looked like, they would not borrow money. I mean, but we're

436
00:41:35,224 --> 00:41:43,744
not taught that in school, but by year 11 of that loan, you will have paid $270,000 in interest.

437
00:41:44,864 --> 00:41:51,404
That is what a median home price should be. Our median home prices should be around that 250 mark,

438
00:41:51,404 --> 00:41:58,504
you know? And so that's, that's just nuts. That's nuts, you know? Um, and it's just debt slavery.

439
00:41:58,604 --> 00:42:03,304
It's just another form of debt slavery. And, and believe it or not, they had them back during the

440
00:42:03,304 --> 00:42:09,984
last crisis as well. Like some people do, you can do them in California. Um, and they're doing

441
00:42:09,984 --> 00:42:14,624
what's called a 40 year modification right now. And it's not helping anybody because basically

442
00:42:14,624 --> 00:42:20,244
your payment goes down by like $20 and then you add 10, 10 more years to your loan. I mean,

443
00:42:20,244 --> 00:42:23,904
I just hope people understand, please don't do this. Like, just please.

444
00:42:24,904 --> 00:42:27,024
It's just, you're going to be a slave forever.

445
00:42:27,624 --> 00:42:30,684
Well, you see this extend and pretend not only the 50 year mortgage,

446
00:42:30,764 --> 00:42:33,744
but I'm not sure if you caught Google wanted to issue a hundred year bond.

447
00:42:33,884 --> 00:42:34,204
Yeah.

448
00:42:34,604 --> 00:42:35,824
Yeah. Sorry. Yeah, I did.

449
00:42:36,184 --> 00:42:39,984
To fund their, their data center expansion.

450
00:42:40,264 --> 00:42:43,244
And people look at that like, Oh, look, long-term financing. It's like, no,

451
00:42:43,304 --> 00:42:47,484
that's, we need to get suckers at the table to give us cash.

452
00:42:47,484 --> 00:42:54,564
sure we can do this and push our exactly push our payments out a century it's just so nuts

453
00:42:54,564 --> 00:43:00,144
some of the things you see going on right now just make your head hurt i mean you know but a lot of

454
00:43:00,144 --> 00:43:05,244
it is just you know it's just a lot of delusion still well what are your thoughts on this data

455
00:43:05,244 --> 00:43:12,284
center expansion and how does it affect it gets commercial real estate um yeah i mean industrial

456
00:43:12,284 --> 00:43:20,684
is already, their vacancy is increasing. I mean, what I saw across the country was a lot of

457
00:43:20,684 --> 00:43:27,784
new data centers for sale and for lease. And, you know, although I, you know, I forget how to say

458
00:43:27,784 --> 00:43:33,124
his name, Torsten Slok or whatever from Apollo, like he has this chart out there that shows that

459
00:43:33,124 --> 00:43:40,724
kind of data center construction peaked in 2023. So, I mean, Marty, I think we might be at a point

460
00:43:40,724 --> 00:43:43,644
where it's already happened.

461
00:43:43,764 --> 00:43:44,604
We're just not aware.

462
00:43:45,464 --> 00:43:47,404
The slowdown is already happening,

463
00:43:47,404 --> 00:43:48,524
even though they're all out there

464
00:43:48,524 --> 00:43:51,124
talking about building data centers on the moon

465
00:43:51,124 --> 00:43:51,964
and blah, blah, blah, blah.

466
00:43:52,184 --> 00:43:53,204
I think that's just the,

467
00:43:53,704 --> 00:43:54,804
somebody give us some money

468
00:43:54,804 --> 00:43:57,104
for ridiculous idea kind of thing.

469
00:43:57,824 --> 00:44:00,284
But I think that, so two things.

470
00:44:00,284 --> 00:44:05,184
One, social media use peaked in 2022.

471
00:44:05,944 --> 00:44:08,284
I think the numbers from OpenAI,

472
00:44:08,284 --> 00:44:14,764
yeah, you know, they're going down. Like, I think, I think this is all peaked already. And we're just,

473
00:44:14,764 --> 00:44:19,524
we're still dealing with, you know, kind of the delusion. And then the second thing that's

474
00:44:19,524 --> 00:44:25,824
going on is, you know, the public is, they're pushing back on this massively.

475
00:44:26,284 --> 00:44:33,504
All over the country, moratoriums, people showing up furious at city council meetings,

476
00:44:33,504 --> 00:44:35,684
because their electricity bills are going up.

477
00:44:35,824 --> 00:44:39,944
And this is, I mean, you know, DeSantis has gotten on this early

478
00:44:39,944 --> 00:44:43,284
and then Bernie Sanders kind of got in and now the Democrats are,

479
00:44:43,404 --> 00:44:47,324
this is going to be a huge midterm issue in my opinion.

480
00:44:48,004 --> 00:44:50,644
And so I think we're not going to have all that construction.

481
00:44:50,644 --> 00:44:55,584
I think that we're just still running through the, you know,

482
00:44:55,644 --> 00:44:57,884
the mania mode right now.

483
00:44:58,084 --> 00:45:02,884
But that in reality, I think they all know that that doesn't even make any sense.

484
00:45:02,884 --> 00:45:18,844
We should be focused on, if we believe in this technology, we should be focused on how to scale it, you know, like how to get the kind of power that wouldn't just take down the entire grid or whatever.

485
00:45:18,844 --> 00:45:33,064
But I have a conspiracy theory on this one that I actually believe a lot of what was written into the BBB is about fortifying the grid versus, you know, maybe construction.

486
00:45:33,664 --> 00:45:42,184
I mean, construction for a private sector because I, you know, remember when they did that big infrastructure build during COVID?

487
00:45:42,404 --> 00:45:43,304
Like, what happened?

488
00:45:43,384 --> 00:45:44,364
Like, nothing, you know?

489
00:45:44,464 --> 00:45:46,764
And it's like our grid is not in good shape.

490
00:45:46,764 --> 00:45:55,684
And so I don't know if you saw the tweet by Trump before the storms that he was going to tap data centers for power to shore up the grid.

491
00:45:55,844 --> 00:46:03,964
And so I think that some of this might actually be a way to sell infrastructure improvements wrapped in an AI mania narrative.

492
00:46:05,064 --> 00:46:07,704
I actually wouldn't be mad at that.

493
00:46:07,824 --> 00:46:09,344
Like, I think it's critically necessary.

494
00:46:09,344 --> 00:46:12,724
We need energy generation, capacity expansion.

495
00:46:12,884 --> 00:46:13,964
We need transmission expansion.

496
00:46:13,964 --> 00:46:18,324
And to your point, the grid is not in a great spot right now.

497
00:46:18,384 --> 00:46:19,384
It could certainly be better.

498
00:46:19,764 --> 00:46:20,964
And we've seen this in Bitcoin.

499
00:46:21,124 --> 00:46:23,844
I've been in Bitcoin mining for almost a decade now.

500
00:46:24,624 --> 00:46:28,224
And that's one thing we do very well is demand response.

501
00:46:28,224 --> 00:46:42,884
And so like in ERCOT, the TVA, where you are in mining operations that we're in certain price programs that we get where we get a good deal.

502
00:46:42,884 --> 00:46:46,284
because when, and this happened three weeks ago

503
00:46:46,284 --> 00:46:49,204
when the storm hit, when demand spikes,

504
00:46:49,364 --> 00:46:50,804
we get asked to shut down.

505
00:46:51,044 --> 00:46:52,584
We're able to send that electricity back

506
00:46:52,584 --> 00:46:54,784
to residential consumers.

507
00:46:56,144 --> 00:46:57,544
Yeah, that's kind of cool.

508
00:46:57,804 --> 00:46:58,544
I mean, you know.

509
00:46:59,884 --> 00:47:01,804
But that's specific to Bitcoin.

510
00:47:02,284 --> 00:47:02,424
Right.

511
00:47:02,824 --> 00:47:04,064
You can do that with Bitcoin miners

512
00:47:04,064 --> 00:47:06,244
because Bitcoin's a distributed system.

513
00:47:06,624 --> 00:47:10,584
And so shutting down mining operations in Tennessee

514
00:47:10,584 --> 00:47:13,044
because it's cold doesn't disrupt the Bitcoin network.

515
00:47:13,204 --> 00:47:18,824
It may slow down block production by a few seconds to a few minutes,

516
00:47:18,824 --> 00:47:22,804
but that's not going to stop transactions from ultimately being processed.

517
00:47:22,804 --> 00:47:27,144
And so you have a unique use case within Bitcoin mining

518
00:47:27,144 --> 00:47:32,604
where you have this sort of responsive, controllable load

519
00:47:32,604 --> 00:47:34,644
that can turn off in a moment's notice.

520
00:47:34,744 --> 00:47:39,744
But when it comes to the AI, particularly if you're training models

521
00:47:39,744 --> 00:47:42,944
in running inference, those operations can't be disrupted.

522
00:47:43,684 --> 00:47:47,304
Bitcoin is called disruptible load that exists.

523
00:47:47,684 --> 00:47:51,304
And so if we are going to build out these data centers

524
00:47:51,304 --> 00:47:54,344
and this infrastructure, I think the Bitcoin mines need to be,

525
00:47:54,604 --> 00:47:57,824
or the AI data centers need to be paired with Bitcoin mines

526
00:47:57,824 --> 00:48:03,304
that provide that disruptible load to send electricity back to residents

527
00:48:03,304 --> 00:48:04,804
when they need it, when demand spikes.

528
00:48:05,384 --> 00:48:06,204
Right. Yeah.

529
00:48:06,204 --> 00:48:14,484
I'm actually going to be doing a trip here soon to Stargate and a bunch of the different data centers in the south.

530
00:48:15,984 --> 00:48:19,184
You know, because I want to see what's really going on there.

531
00:48:19,724 --> 00:48:22,144
You know, we can't trust what we're being told.

532
00:48:22,384 --> 00:48:24,784
That's what, you know, my conclusion.

533
00:48:25,084 --> 00:48:29,044
And the way that I really understood what was happening in housing was I went out and looked.

534
00:48:29,144 --> 00:48:32,864
And so that's what we're going to do is go look at some of these big sites and see.

535
00:48:32,864 --> 00:48:38,624
You know, the ones in Memphis, I mean, that's going to be a very interesting case.

536
00:48:38,884 --> 00:48:41,664
It looks, you know, they're getting sued.

537
00:48:43,264 --> 00:48:48,804
So, you know, I just think there's going to be a ton of pushback on these.

538
00:48:48,924 --> 00:48:56,804
I saw Ed Dowd tweet something funny that I actually believe in, that I think what they're doing is spurring this anti-technology movement.

539
00:48:57,444 --> 00:49:01,644
Like people are saying, I mean, I don't want smart technology in my house.

540
00:49:01,644 --> 00:49:14,904
I don't want to be woken up in the middle of the night when Amazon AWS goes down and my bed bolts me out of bed by raising up or suddenly it's 150 degrees in my bed.

541
00:49:15,344 --> 00:49:19,324
And these are the types of things that we don't need that.

542
00:49:19,404 --> 00:49:20,204
That's just stupid.

543
00:49:20,564 --> 00:49:21,824
What does that do?

544
00:49:22,424 --> 00:49:27,864
And then these appliances that they're all smart, they die in like two years.

545
00:49:27,944 --> 00:49:29,524
The software dies, like whatever.

546
00:49:29,524 --> 00:49:31,364
So there's no quality.

547
00:49:31,644 --> 00:49:38,184
So I think actually what we're probably going to see is kind of the rise of a, you know, no more.

548
00:49:38,324 --> 00:49:39,344
I don't want this stuff.

549
00:49:39,344 --> 00:49:43,884
A bunch of Uncle Ted acolytes coming out of the woodwork to say, hey.

550
00:49:43,884 --> 00:49:44,144
Right.

551
00:49:46,544 --> 00:49:51,804
Yeah, it's I'm very big anti smart home guy.

552
00:49:52,124 --> 00:49:58,204
But again, I've been using AI, TFTC to help just automate some stuff on the back end.

553
00:49:58,304 --> 00:49:59,144
It's been extremely helpful.

554
00:49:59,144 --> 00:50:06,624
But to your point, it's sort of threading the needle and figuring out what the appropriate tradeoffs are, like how to use this appropriately.

555
00:50:06,784 --> 00:50:20,904
And then I'm sure you saw yesterday that sort of white hat hacker research group found out that the company doing KYC AML for open AI is just automatically piping all the information to the government.

556
00:50:20,904 --> 00:50:30,124
You have this surveillance panopticon that is being erected behind the scenes alongside this AI technology.

557
00:50:30,604 --> 00:50:43,364
And there's a right way and a wrong way to do everything, including AI and all layers of it from the energy to the data center discussion and the pushback against it.

558
00:50:43,524 --> 00:50:46,104
We've learned this in Bitcoin mining, too.

559
00:50:46,244 --> 00:51:02,076
And I think Bitcoin miners actually have it worse because the machines create so much noise you have to be very specific with where you plot these data centers down it should be like in rural areas where you not going to disrupt um residential neighborhoods because the sound too

560
00:51:02,076 --> 00:51:08,476
loud or it's just ugly and eyesore right um i saw earlier this morning new brunswick i'm not sure

561
00:51:08,476 --> 00:51:14,156
which state um the the citizens there were successfully able to convince their city council

562
00:51:14,156 --> 00:51:18,236
to deny a data center construction.

563
00:51:18,796 --> 00:51:19,336
But the point being,

564
00:51:19,476 --> 00:51:20,156
it's like your straight-off

565
00:51:20,156 --> 00:51:21,796
is the right way and the wrong way to do it.

566
00:51:21,876 --> 00:51:24,036
I think AI is figuring that out.

567
00:51:24,076 --> 00:51:25,276
BigQuery miners figured it out

568
00:51:25,276 --> 00:51:28,296
beginning of 2020, 2021.

569
00:51:29,796 --> 00:51:31,096
You've got to be very strategic

570
00:51:31,096 --> 00:51:32,236
where you plop these down.

571
00:51:32,776 --> 00:51:33,216
Absolutely.

572
00:51:33,536 --> 00:51:36,056
Unfortunately, due to the state of the grid

573
00:51:36,056 --> 00:51:37,756
and generation capacity,

574
00:51:38,756 --> 00:51:40,236
your options are limited.

575
00:51:40,916 --> 00:51:43,196
But I think we need to get to the base

576
00:51:43,196 --> 00:51:50,756
of this industry, which is generation capacity and smartly plop down generation in areas where

577
00:51:50,756 --> 00:51:57,316
it's not going to disrupt residential consumers. Yeah. I wish we were having conversations about

578
00:51:57,316 --> 00:52:02,316
what we want this to be. You know, it just, it feels like it's so much hype. There's not really

579
00:52:02,316 --> 00:52:09,136
any like, okay, what, what, what do we really want here? And, you know, the techno cultic

580
00:52:09,136 --> 00:52:18,536
group. I can't, uh, you know, the technocracy, um, but I put cult in the middle of it. Uh,

581
00:52:18,996 --> 00:52:24,856
you know, they have very things that I don't think any of us really know and understand as

582
00:52:24,856 --> 00:52:30,336
their angles. Um, you know, like the, what is it? Vitalism movement or whatever.

583
00:52:30,736 --> 00:52:35,496
Transhumanism. Yeah. Transhumanism. Um, we, you know, our biggest problem is that we die,

584
00:52:35,496 --> 00:52:39,896
you know, these things and very Tower of Babel type stuff.

585
00:52:41,376 --> 00:52:49,836
So we're not really sitting down and talking about what we want this to be, like the larger society, like the tech grows have a very specific idea.

586
00:52:49,936 --> 00:52:51,836
And I just wish we'd have that conversation.

587
00:52:52,196 --> 00:52:58,216
But I'm just going to give you a funny example for, you know, for people to like how much of this is narrative, how much is reality?

588
00:52:58,216 --> 00:53:04,776
Like, you know, when that software route happened last week or a couple of weeks ago, time is just I don't even know anymore.

589
00:53:04,776 --> 00:53:09,696
You know, it was because theoretically Anthropic came out with this legal and marketing service.

590
00:53:10,036 --> 00:53:23,856
On the same day, I was talking to someone at a conference, a builder conference, where the attorneys are now making bank because they're suing people that used AI for contracts and they're incorrect.

591
00:53:23,856 --> 00:53:29,896
And in fact, I was an expert witness on a case where the guy called me in to review.

592
00:53:30,176 --> 00:53:31,156
He filed a complaint.

593
00:53:31,516 --> 00:53:33,276
He used AI to file the complaint.

594
00:53:33,756 --> 00:53:37,756
And I had to go to him and say, this is all patently false.

595
00:53:38,256 --> 00:53:44,176
There's not a single iota of evidence of what you claim in this complaint.

596
00:53:44,656 --> 00:53:47,436
Well, no, the letter said, and I'm like, bring up the letter.

597
00:53:47,896 --> 00:53:49,816
What did the letter actually say?

598
00:53:50,236 --> 00:53:53,196
And so there was this moment where his brain is just

599
00:53:53,856 --> 00:53:57,176
You know, and he's told me, because I'm a skeptic.

600
00:53:57,256 --> 00:54:01,736
I believe in certain aspects of the technology, but I think the hype is crazy.

601
00:54:01,936 --> 00:54:04,396
And so he's like, you're wrong on AI.

602
00:54:04,556 --> 00:54:05,836
This was two weeks before.

603
00:54:05,836 --> 00:54:13,656
And then, you know, basically his entire case was, it was not a single fact was correct in the complaint.

604
00:54:15,016 --> 00:54:18,436
So I just, you know, we're just not there yet.

605
00:54:18,616 --> 00:54:21,676
And I say all the time, you can believe in the technology, not the hype.

606
00:54:21,676 --> 00:54:26,256
But we're not being, we're not having real conversations about it, in my opinion.

607
00:54:26,256 --> 00:54:31,196
And what I saw in corporate America is they don't have the gumption.

608
00:54:31,296 --> 00:54:32,616
They don't have the stick to it.

609
00:54:32,616 --> 00:54:37,876
It's like the, you know, perseverance to actually see any of this through.

610
00:54:37,976 --> 00:54:39,756
They give up and they send it offshore.

611
00:54:40,116 --> 00:54:40,956
They send it to India.

612
00:54:41,016 --> 00:54:43,596
Like they just give up because it's hard work.

613
00:54:43,956 --> 00:54:45,016
It's really hard work.

614
00:54:45,696 --> 00:54:45,836
Yeah.

615
00:54:46,056 --> 00:54:48,196
You have to, it's not out of the box.

616
00:54:48,476 --> 00:54:50,916
Like some Jarvis like wizard that can do everything.

617
00:54:51,116 --> 00:54:51,196
Right.

618
00:54:51,196 --> 00:54:52,336
You have to know what you're doing.

619
00:54:52,476 --> 00:54:56,016
You have to know what models do what specific tasks the best.

620
00:54:56,656 --> 00:54:58,556
And then you have to check the work too.

621
00:54:59,276 --> 00:54:59,516
Yeah.

622
00:54:59,756 --> 00:55:00,756
You got to check it out.

623
00:55:00,996 --> 00:55:01,156
Yeah.

624
00:55:01,716 --> 00:55:05,276
Well, that's what, I mean, my biggest worry talking about tinfoil hat, like conspiracy,

625
00:55:05,736 --> 00:55:12,676
like tying the Epstein files into this, I worry about like a Hegelian dialectic situation

626
00:55:12,676 --> 00:55:15,656
being put forth where everybody's like, look, it's all corrupt.

627
00:55:15,756 --> 00:55:17,176
The Epstein file is approving this.

628
00:55:17,236 --> 00:55:17,996
We need a solution.

629
00:55:17,996 --> 00:55:21,616
and then the transhumanist tech bros come in and be like AI.

630
00:55:22,476 --> 00:55:25,696
And we get to minority report, you know, and that's the solution.

631
00:55:25,816 --> 00:55:29,716
Everybody welcomes it with open arms because they point at the Epstein files

632
00:55:29,716 --> 00:55:33,356
and say this is a poor in which obviously objectively it is,

633
00:55:33,436 --> 00:55:36,396
but they get that's how you get the Antichrist.

634
00:55:36,396 --> 00:55:36,956
Right.

635
00:55:38,056 --> 00:55:39,576
The fake solution.

636
00:55:40,256 --> 00:55:40,436
Yeah.

637
00:55:41,136 --> 00:55:43,336
Yeah, no, I mean, I worry about that too.

638
00:55:43,336 --> 00:55:48,776
And I worry that, you know, we are, the noise out there is so massive right now.

639
00:55:48,976 --> 00:55:51,416
You know, it's just like dialogue, conspiracy.

640
00:55:51,696 --> 00:55:57,016
And I don't mean like conspiracy, like that it's, I think we can all realize now that the

641
00:55:57,016 --> 00:56:01,816
people that were called conspiracy theorists were just the ones paying attention, you know?

642
00:56:01,896 --> 00:56:02,156
Right.

643
00:56:02,276 --> 00:56:02,936
Yeah, exactly.

644
00:56:03,796 --> 00:56:11,276
And so I, but just the amount of information we're getting, like the, I mean, it's just

645
00:56:11,276 --> 00:56:16,656
Like it's it's there's a good theory out there for everybody right now to kind of keep them distracted.

646
00:56:16,656 --> 00:56:20,456
And I honestly think that's to keep them distracted from what's going on in the economy.

647
00:56:21,216 --> 00:56:24,036
Yeah. Sovereign individual predicted this in the 90s.

648
00:56:24,096 --> 00:56:27,776
The noise to signal ratio is going to go so out of sync.

649
00:56:27,856 --> 00:56:38,416
It's impossible to discern unless you have your facilities about you and your faculties about you and are able to actually take the time to filter the signal through the noise.

650
00:56:38,416 --> 00:56:44,776
yeah what um bringing this back to housing before we get too far down the uh transhumanist techno

651
00:56:44,776 --> 00:56:49,896
rabbit hole i mean the demo of this podcast is interesting it's a bunch of people older than me

652
00:56:49,896 --> 00:56:56,236
our core demo is older than me um and so basically with what you're seeing

653
00:56:56,236 --> 00:57:04,056
in the real estate market our demos is like older millennials gen x and boomers what would your

654
00:57:04,056 --> 00:57:11,176
advice to them be particularly the older generations that are sitting on a bunch of real estate and

655
00:57:11,176 --> 00:57:16,236
trying to think about what to do? I think you have to list it. I mean, just go ahead and list it.

656
00:57:16,416 --> 00:57:19,716
And just, you know, if you think that you're going to be selling in the next couple of years

657
00:57:19,716 --> 00:57:25,656
or want to sell, I think you should go ahead and get it listed because I think all of a sudden at

658
00:57:25,656 --> 00:57:32,716
once you're going to be in the middle of a fire sale and, you know, it'll come later to certain

659
00:57:32,716 --> 00:57:39,876
places and sooner to other places. And that's what I really try to talk about. But just list it

660
00:57:39,876 --> 00:57:45,496
and get a more realistic expectation of what your house is probably worth. And to people that can

661
00:57:45,496 --> 00:57:52,036
afford it, I say, go get an independent appraisal, not to do with any loan or anything like that,

662
00:57:52,036 --> 00:57:58,096
but just pay for an actual independent appraisal. Because that Zestiman is lying to you. It's not

663
00:57:58,096 --> 00:58:07,796
based in reality. It's not a, uh, a helpful comp, um, comparison. And so it's just, it's done a lot

664
00:58:07,796 --> 00:58:12,216
of disservice for people, you know? Um, so if you have real estate, you're, you think you're going

665
00:58:12,216 --> 00:58:16,416
to sell in the next, you know, two to five years, you may want to consider listing it or getting a

666
00:58:16,416 --> 00:58:22,856
real appraisal. Um, and then, you know, I would say for those that want to buy, like, um, you know,

667
00:58:22,856 --> 00:58:29,996
if you're aggressive, there are deals even now out there, but it takes homework. And I think that,

668
00:58:30,076 --> 00:58:37,556
you know, during COVID, we all got used to, you know, not doing a lot of work for things. And so

669
00:58:37,556 --> 00:58:44,376
you have to be aggressive. But yeah, you know, to me, what's going to happen here because of the

670
00:58:44,376 --> 00:58:51,396
silver tsunami is housing is going to become boring again. And it's going to correct to a

671
00:58:51,396 --> 00:59:00,156
point where it correlates to the median income, you know, and they've subsidized this market to

672
00:59:00,156 --> 00:59:04,976
death. Like they have literally, you know, so people talk about, oh, what about this new bill

673
00:59:04,976 --> 00:59:10,316
that just got passed? It's like, it's just more of the same. And most people could get $25,000

674
00:59:10,316 --> 00:59:16,116
in assistance for down payment in their city, like all over the country already. And so they've

675
00:59:16,116 --> 00:59:20,856
brought in everybody they can into the mortgage market. I mean, it's just dead. It's dead. Like,

676
00:59:20,856 --> 00:59:27,176
rates went down massively last week, Marty. I mean, a week and a half ago,

677
00:59:27,896 --> 00:59:34,996
purchase applications went down this week. I mean, refi went up, but not purchase. So

678
00:59:34,996 --> 00:59:42,076
rates aren't going to do it. We are certainly not seeing rising wages. So really there's one

679
00:59:42,076 --> 00:59:47,436
option out of this, you know, and that's home prices have to correct. And so if you're banking

680
00:59:47,436 --> 00:59:53,096
on that equity for your retirement, you know, don't be the last one out of the door. Like it

681
00:59:53,096 --> 00:59:57,456
just, you know, but if you're, this is your first home and you think you're going to be here for the

682
00:59:57,456 --> 01:00:02,076
next 20 years and you don't have to worry as much about this kind of stuff, you know, you want to

683
01:00:02,076 --> 01:00:08,216
have reserves on hand for sure in case you lose your job. But, you know, you've got a different

684
01:00:08,216 --> 01:00:15,516
goal. Unfortunately, probably about 40% of the housing market though is speculation and their

685
01:00:15,516 --> 01:00:25,956
goal is, you know, yield and rising home prices and cashing out that equity to keep the party

686
01:00:25,956 --> 01:00:32,476
going. So. I mean, on that last note there, like how, how's the Airbnb economy, all those

687
01:00:32,476 --> 01:00:39,876
Airbnb wizards who emerged in 2021 and 2022, are they tapped out? Have they fire sold yet? Or are

688
01:00:39,876 --> 01:00:44,176
they still holding on? They're so a lot of them are fire selling. You know, it was funny as they

689
01:00:44,176 --> 01:00:50,596
made a transition for a little while to like the whole narrative would be get out of real estate,

690
01:00:50,696 --> 01:00:57,996
get into Bitcoin before, you know, we kind of saw that route in April or whatever. Um, but yeah,

691
01:00:57,996 --> 01:01:06,296
so, uh, they're coming to market and like the, in some of the more crazy markets, like Severeville,

692
01:01:06,396 --> 01:01:13,436
Tennessee, like you can see the distress is bad and they just built these homes that make no sense,

693
01:01:13,436 --> 01:01:20,996
you know, for families of 15, you know, it's just not. And then places like San Diego,

694
01:01:21,456 --> 01:01:27,296
you know, it's just a full on infestation. And so in Austin and all, so they're coming to market.

695
01:01:27,296 --> 01:01:33,976
And I think they'll start, you know, as we can continue to see kind of persistent downturns

696
01:01:33,976 --> 01:01:40,496
in travel and that kind of thing that that's just going to accelerate because these things aren't

697
01:01:40,496 --> 01:01:46,416
making money and they're a headache. I mean, being a landlord is a headache. Um, and so,

698
01:01:46,416 --> 01:01:51,776
and Airbnb doesn't care about you at all. Like they treat you like dirt. So they're, they're

699
01:01:51,776 --> 01:01:56,676
coming and you're seeing these like motivated seller. And I mean, and you're just seeing crazy,

700
01:01:56,896 --> 01:02:03,076
crazy homes that should have never been built come to market in these, in these, uh, in these

701
01:02:03,076 --> 01:02:08,656
vacation spots. So. Yeah. I'm thinking of the Airbnb we stayed in when we visited Austin,

702
01:02:08,656 --> 01:02:10,636
when we were looking for a house in 2021.

703
01:02:11,296 --> 01:02:13,936
And I don't think you could ever sell that to somebody

704
01:02:13,936 --> 01:02:19,936
who would actually want to live in that as their residential property.

705
01:02:19,996 --> 01:02:20,916
Did it have a theme?

706
01:02:21,536 --> 01:02:22,636
It did. It did.

707
01:02:24,356 --> 01:02:27,976
My favorite is the bananas theme in Nashville, that property.

708
01:02:28,316 --> 01:02:30,056
There's so many of them, though.

709
01:02:30,456 --> 01:02:32,096
There's the Barbie castle.

710
01:02:32,796 --> 01:02:34,876
I mean, there's so many themed Airbnbs.

711
01:02:34,876 --> 01:02:43,156
I mean, it's just, I think it's all this is just an indictment of the federal government and the central banks, just pretty money.

712
01:02:43,316 --> 01:02:49,356
Like you become deluded into believing that a banana themed Airbnb is a good idea.

713
01:02:49,576 --> 01:02:50,016
Right.

714
01:02:50,296 --> 01:02:51,956
Something sustainable as a business.

715
01:02:52,116 --> 01:02:52,296
Right.

716
01:02:52,716 --> 01:02:52,976
Right.

717
01:02:53,356 --> 01:02:54,256
And I agree.

718
01:02:54,416 --> 01:02:55,196
I totally agree.

719
01:02:55,196 --> 01:03:12,036
And I just, what's crazy is, you know, the other thing though, I try to remind myself is when I just go out into the world and I interview people on the road or Uber driver, they are way more aware than a fin twit of what's going on.

720
01:03:12,036 --> 01:03:28,896
And so I just kind of try to tell myself, OK, you know, we're dealing with a certain group, select group out there in financial media that is, you know, a lot of them are in the ivory tower of some sort and they don't really understand what's going on.

721
01:03:29,696 --> 01:03:31,756
But regular Americans do.

722
01:03:32,436 --> 01:03:35,196
Yeah. Yeah. In two years of like, oh, it was completely obvious.

723
01:03:35,576 --> 01:03:37,036
I just didn't tell you about it.

724
01:03:37,556 --> 01:03:39,716
Mm hmm. Oh, exactly.

725
01:03:40,136 --> 01:03:40,316
Yeah.

726
01:03:40,816 --> 01:03:42,436
We could have never seen this coming.

727
01:03:42,616 --> 01:03:43,256
Okie dokie.

728
01:03:43,716 --> 01:03:45,616
I mean, it's just math at the end of the day.

729
01:03:45,836 --> 01:03:51,216
I mean, the problem is, you know, most of our data is corrupt, so we can't even get to the real math.

730
01:03:52,956 --> 01:03:53,316
Yeah.

731
01:03:53,436 --> 01:03:56,696
I mean, is there a fix to that or is it something we just had to deal with?

732
01:03:57,196 --> 01:03:57,496
I don't.

733
01:03:57,616 --> 01:03:58,816
I mean, surely, right?

734
01:03:58,816 --> 01:04:06,136
Like, you know, this company, Placer AI, can tell you how many cell phones are in any one city at any time.

735
01:04:06,436 --> 01:04:09,596
Are you telling me we can't really figure out how many houses we have in this country?

736
01:04:09,716 --> 01:04:17,496
I mean, I just don't, I don't get that. And so, uh, so this, uh, a woman I met in Australia did a

737
01:04:17,496 --> 01:04:23,156
really interesting study. She used the utilities. She used like the water company to really get true

738
01:04:23,156 --> 01:04:29,056
inventory. Um, and I try, I've, I've gone to a couple of different water boards to try to do

739
01:04:29,056 --> 01:04:34,716
that. And it's harder over here than I think over there. Um, but you know, it's just, we need real

740
01:04:34,716 --> 01:04:38,596
data. But no, I think that we are in full,

741
01:04:39,316 --> 01:04:42,696
they are just shoveling it right now, just shoveling it.

742
01:04:42,696 --> 01:04:47,496
Like none of this is, is true, accurate at all. And so I hope there is a,

743
01:04:47,756 --> 01:04:49,296
I mean, I hope that we,

744
01:04:49,456 --> 01:04:54,916
I hope that more people start standing up and showing up at their city council

745
01:04:54,916 --> 01:04:58,756
meetings and saying they're sick of this and that, and you know,

746
01:04:58,996 --> 01:05:02,236
but it's going to be us having to take responsibility in my opinion.

747
01:05:02,236 --> 01:05:05,236
Yeah. That's funny, too.

748
01:05:05,236 --> 01:05:10,276
They just recognize this in Bitcoin, obviously focused heavily on CPI.

749
01:05:10,276 --> 01:05:14,276
And I'm guilty of it.

750
01:05:14,276 --> 01:05:17,536
I'll put my hand up. I'm guilty of it myself to a certain extent.

751
01:05:17,536 --> 01:05:22,236
But like during Biden, you're looking at the inflation rates, you're like, oh, they're underreporting.

752
01:05:22,236 --> 01:05:25,236
Yeah, because they're trying to mask inflation.

753
01:05:25,236 --> 01:05:29,796
And now with Trump inflation rates coming down, everybody's like, look, look, it's working.

754
01:05:29,796 --> 01:05:35,096
it's working it's like well if the metric was manipulated under the prior administration

755
01:05:35,096 --> 01:05:41,416
what's to make you believe that it's not manipulated under this one right right what can you believe

756
01:05:41,416 --> 01:05:48,856
what can we believe these days i think what you see you know um and even then like that's kind of

757
01:05:48,856 --> 01:05:55,096
funny i remember after helene people would argue with me about something i'm reporting on that i'm

758
01:05:55,096 --> 01:05:59,176
that was i saw it right in front of my face and they're telling me i didn't see that you know like

759
01:05:59,176 --> 01:06:04,896
but I did, you know, and I have a picture of it, but it's still, so, I mean, I think that we're at

760
01:06:04,896 --> 01:06:11,136
a point where it's just, um, it's what we can see and then sort of triangulate the data. I mean,

761
01:06:11,136 --> 01:06:16,076
I think that that's what I really try to do is like, okay, this picture in front of us doesn't

762
01:06:16,076 --> 01:06:22,256
make sense. So how can we put one together, like from the outside, like frame a picture of what's

763
01:06:22,256 --> 01:06:27,956
actually happening. Um, and I think when you can do that, when you can kind of triangulate the data

764
01:06:27,956 --> 01:06:30,776
and then you can verify it by what you see with your own eyes.

765
01:06:30,916 --> 01:06:35,796
I think that's how we, you know, can sort of believe something's true.

766
01:06:36,376 --> 01:06:36,556
Yeah.

767
01:06:37,816 --> 01:06:43,356
Look out for the BTFP program for the private equity guys in their houses.

768
01:06:43,356 --> 01:06:47,476
I think that'll be a, I think it's a sly route about bailout.

769
01:06:48,056 --> 01:06:48,716
I 100%.

770
01:06:48,716 --> 01:06:51,316
I think the same about the Trump homes.

771
01:06:51,496 --> 01:06:53,236
That's a builder bailout right there.

772
01:06:53,716 --> 01:06:53,816
Yeah.

773
01:06:53,816 --> 01:07:00,856
I mean, they're going to buy them at a certain percent of, you know, immediate, like adjusted gross income.

774
01:07:00,856 --> 01:07:03,956
Like they'll say, OK, you need this to come.

775
01:07:04,096 --> 01:07:04,916
I'll buy it from you.

776
01:07:04,996 --> 01:07:06,076
Twenty five percent less.

777
01:07:06,076 --> 01:07:09,976
They'll put some price floor on it, actually, for these builders.

778
01:07:10,136 --> 01:07:10,956
And that is a bailout.

779
01:07:11,036 --> 01:07:17,136
But, you know, these things tend to once they get going, there's you know, they can try and stop them.

780
01:07:17,676 --> 01:07:20,996
But the market force just takes over.

781
01:07:20,996 --> 01:07:27,896
well we'll be observing we'll be watching we'll be reading your newsletter to follow along hopefully

782
01:07:27,896 --> 01:07:33,756
um we can catch up on this at some point later this year absolutely it's gonna be an interesting

783
01:07:33,756 --> 01:07:40,756
spring it really is melody thank you so much everybody make sure you go subscribe m3 underscore

784
01:07:40,756 --> 01:07:47,256
melody on sub stack uh we'll link to that in the show notes and we'll uh we'll do this again at

785
01:07:47,256 --> 01:07:51,176
some point later this year. Thank you so much, Marty. Thank you. Peace and love freaks.